Dictionary definitions for the word “tap” include, “a device through which liquids or gases flow” and “exploiting or drawing from”. And both are appropriate when describing independent oil and gas exploration and production company Tap Oil.

The company has been successfully exploiting oil and gas fields in several countries over the past 20 years and has been or still is a strategic partner in controlling the flows of hydrocarbons from those resources that have been or are still being developed.

And the analogy of the workings of a physical tap is also appropriate when describing how the company has performed over the years.

Initially the tap was partially opened, flowing both production and profit, through the company’s stake in the North West Shelf Harriett joint venture that discovered and subsequently developed the oil field The tap then opened some more with the company participating in the development of the offshore Western Australia Woollybutt oil field and its subsequent production.

However, the tap has had times of partial if not complete closure, including the company selling out of the Harriett joint venture during 2011 and Woollybutt ceasing production a year later.

Later the tap started opening again with the development of the 2009 Gulf of Thailand Manora oil field discovery. The field has been flowing since late 2014, providing good production (a total of about 15,000 barrels of oil per day (bbl/d), with Tap’s share being about 4500 bbl/d) and low operating costs (of about US$20/bbl) continuing to generate strong cashflows.

But it was during these times of low flow, or no flow, that there was industry talk that Tap would be forced to merge with other companies to survive, be taken over, or sell some of its assets. However, Tap has since repositioned itself, refinanced, and is now looking to expand its activities in Australia and South East Asia.

Industry commentators say Tap is just like any other junior players, experiencing the highs and lows of the international oil scene, and making some unfortunate decisions, with the most recent being initially not hedging any Manora production.

“They’ve restructured debt, they’re not looking to merge any more, and they’re not looking bad. In fact they’re looking quite robust but need to continue to broaden their horizons away from the North West Shelf, which they are now doing,” one industry insider believes.

Some media use a picture or photograph of a physical tap to accompany their reports on the Perth headquartered-listed company. While that is appropriate, it is not accurate as it is known the firm’s founders, Ted Jacobson and Peter Lane, named their company after the initial letters of their first names together with the first letter of the conjunctive word “and”. Hence “Ted And Peter”.

Tap was valued at more than $400 million during Jacobson’s time at the helm and he was honored earlier this year at the 2015 RIU Good Oil Conference, being awarded the John Doran Lifetime Achievement Award, principally for his work in building Western Australia's offshore oil industry. However, Tap’s current market capitalisation is only a fraction of that previous peak, hovering about the $50 million mark.

Tap was incorporated as a company in March 1995 and listed on the Australian Securities Exchange (ASX) during September the following year, raising $50 million in that initial public offering. Its primary asset at that time was a minority stake (of just over 12 per cent), obtained from Marubeni Oil, in the Harriet Joint Venture exploring for oil and gas fields on the North West Shelf.

The subsequent Harriet discovery was initially thought to contain only about 17 million barrels (MMbbl) of recoverable oil but the field produced some 50 MMbbl, exceeding all expectations. The Harriet discovery also enabled the discovery and development of several other smaller fields, with perhaps the best being the Woollybutt oil field.

Tap farmed into the WA-234-P lease during 1997 and participated in the Woollybutt initial exploration well that resulted in a commercial oil discovery. Woollybutt was commissioned during 2003 and, again, exceeded expectations, producing about 29 million barrels of oil from an estimated 40 MMbbl of ultimately recoverable reserves.

The company’s activities have also included a foray into the small New Zealand energy sector last decade.

It initially took interests in several offshore and offshore exploration leases from the early 2000s. Tap’s operated and non-operated interests focused on the Taranaki Basin, the country’s only commercial region, but also extended to the East Coast Basin and Canterbury Basin. Tap also established an office in the country’s capital Wellington headed by veteran Kiwi oilie Clyde Bennett for about four years.

However, its Kiwi campaigns were singularly unsuccessful.

None of its offshore ventures proved commercial, including the Tawatawa-1 wildcat well off the East Coast and Cutter-1wildcat off Canterbury, and the petroleum strikes it made in onshore Taranaki were either non-commercial or developed by other joint ventures after Tap exited New Zealand late last decade.

Just after it left New Zealand, Tap won a significant interest in the Offshore Accra Contract Area awarded by the government of Ghana and it, together with its partners, later drilled the non-commercial deepwater Starfish-1 wildcat well.

About the same time Tap acquired 75 per cent of Northern Gulf Petroleum Pty, which held a 40 per cent stake in three concessions in the north and central parts of the Gulf of Thailand (G3/48, G1/48, G6/48) and it was in the G1/48 lease that Manora was discovered.

Tap has also drawn on the expertise of many knowledgeable oilies over the decades, helping the company become the robust listed junior player that it is today in Australia and South East Asia.

Tap’s current experienced and diverse directors also contribute to the on-going success of the company.

Board chairman Douglas Bailey has been an independent, non-executive director since 2009. An accountant by training he has over 35 years of experience in the resources industry, including being a former chief financial officer for Woodside Petroleum.

Managing Director and CEO Troy Hayden has been a director since 2006 and managing director since late 2010. He joined Tap fulltime after a two-year stint consulting on a number of financial and commercial projects and, prior to that, a 12-year career with Woodside Petroleum.

Michael Sandy has been a non-executive director since 2006. He is a geologist with over 35 years experience in the resources sector, with the past 30 years focused on oil and gas. His previous resources experience includes being technical manager of Oil Search and being based in Port Moresby, Papua New Guinea, for three years leading up to the Kutubu oil fields coming into production. For the last 10 years he has been principal of resources industry consultants Sandy Associates.

Douglas Schwebel has been an independent, non-executive director since 2012. He has over 35 years’ experience in the international oil and gas sector, including a 26-year stint with supermajor ExxonMobil between 1980 and 2006, He was part of the team that discovered the giant Jansz-Io gas field on the North West Shelf and he also played a key role in its integration into the wider Gorgon LNG project.

Hayden, the third managing director after Peter Lane and Paul Underwood, said the Manora oil field—the company’s “flagship”—features as both a highlight and a lowlight during his time at the helm.

“Manora is a lowlight because it commenced production at a time of lower world oil prices … but it is also a highlight because it is a high quality project.”

And the commencement of production at Manora during November 2014 marked “a significant milestone” for Tap, returning the company to being a mid-tier producer following a two-year break in production.

However, the collapse in world oil prices virtually coincided with bringing Manora into production, necessitating Tap refinancing its existing debt of US$56 million (with BNP Paribas and Siam Commercial Bank) with Macquarie Bank for a US$55 million borrowing base debt facility. This facility includes a requirement to hedge a certain percentage of future production—something Tap failed to do under the previous arrangement for the development of Manora.

There have also been on-going payment disputes between Thai businessman Chatchai Yenbamroong and his Northern Gulf companies—disputes involving both Tap and Manora operator Mubadala Petroleum.

However, Hayden remains unperturbed by this.

“Tap will continue to work with Mr Yenbamroong and his companies to ensure that there is a fair outcome of current matters,” he said.

“And Tap, along with Mubadala Petroleum and Northern Gulf Petroleum, will continue to work on maximising value of Manora through near field exploration.”

This includes two additional development wells in the East Fault Block, with drilling likely during 2016.

Tap also recently signed a production sharing contract (PSC) for the highly prospective block M-7 in the prolific offshore Moattama province of Myanmar. Tap now has a 95 per cent stake in and operates the Myanmar lease, with an environmental and social impact assessment (ESIA) due to be carried out over an 18-month study period.

“We will evaluate the technical data available information for the PSC and use it, along with the information gathered as part of the ESIA process, to plan an exploration programme,” Hayden said.

Closer to home, Tap’s remaining third party gas sales agreements, based around the John Brookes field in the offshore Carnarvon Basin, Western Australia, run until the end of 2016.

And Tap has acquired a significant offshore acreage position in the North West Shelf and intends to continue a measured exploration and development program over the coming years.

Tap has recently been awarded the Western Australian leases WA-515-P and WA-516-P and this has further enhances the company’s Australian asset portfolio, according to Hayden. “Tap will be reprocessing open file 3-D seismic or licensing existing multi-client reprocessed 3D data and then conducting quantitative interpretation and geological and geophysical (analysis) in order to evaluate the exploration potential of the permits.”

Tap is committed to reinvigorating its growth strategy, maximising the value of Manora through near-field exploration and the progression and evaluation of growth and acquisition opportunities in South East Asia. But it will be the Manora field that will remain Tap’s main core asset for the foreseeable future.

In addition, a rejuvenated Tap is also attracting the attention of Asia focused companies, such as Singapore based Risco Energy that is increasing its current minority shareholding in Tap.

But this also doesn’t worry the Tap boss or board.

“Risco’s entry and increased shareholding of Tap’s shares is a good endorsement from a quality investment company that recognises the market’s undervaluation of Tap’s shares,” Hayden said.

Finally, Tap wants to still be growing, increasing geographically, financially, and production-wise into the next decade.

“Tap will continue to grow its portfolio in Australia and South East Asia, seeking opportunities that are the right fit for its balance sheet and expertise and choosing the right partners to enter into these opportunities with,” Hayden said. “Tap sees a significant benefit in being a bigger organisation with greater access to capital markets, opportunities and ability to manage risk through a diversified portfolio.”

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